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March 10, 2016 PARLIAMENTARY DEBATES 1 NATIONAL ASSEMBLY OFFICIAL REPORT Thursday, 10th March, 2016 The House met at 9.30 a.m. [The Temporary Deputy Speaker (Hon. Cheboi) in the Chair] PRAYERS QUORUM The Temporary Deputy Speaker (Hon. Cheboi): Order, Members! It is fairly obvious that we do not have the requisite quorum. I, therefore, order that the Quorum Bell be rung for 10 minutes. (The Quorum Bell was rung) The Temporary Deputy Speaker (Hon. Cheboi): Hon. Members, we are still short of the requisite quorum. I, therefore, order that the Quorum Bell be rung for a further five minutes. (The Quorum Bell was rung) Hon. Members, we now have the requisite quorum and we will begin the business of the House. BILLS Third Reading THE ASSISTED REPRODUCTIVE TECHNOLOGY BILL The Temporary Deputy Speaker (Hon. Cheboi): Hon. Members, on that Bill and many others, what remains is for the Question to be put. I ask Members to remain in the Chamber so that we can have the requisite quorum like we have now. (Question put and agreed to) (The Bill was accordingly read the Third Time and passed) Third Reading Disclaimer: The electronic version of the Official Hansard Report is for information purposes only. A certified version of this Report can be obtained from the Hansard Editor. March 10, 2016 PARLIAMENTARY DEBATES 2 THE POLITICAL PARTIES (AMENDMENT) BILL (Question put and agreed to) (The Bill was accordingly read the Third Time and passed) Second Reading THE ENERGY BILL (Hon. A.B. Duale on 9.3.2016) (Resumption of Debate interrupted on 9.3.2016 - Afternoon Sitting) (Question put and agreed to) (The Bill was read a Second Time and committed to a Committee of the whole House tomorrow) Second Reading THE BANKING (AMENDMENT) BILL The Temporary Deputy Speaker (Hon. Cheboi): Mover. Hon. Wandayi: On a point of order, Hon. Temporary Deputy Speaker. The Temporary Deputy Speaker (Hon. Cheboi): Hon. Wandayi, what is out of order? Hon. Wandayi: Hon. Temporary Deputy Speaker, my point of order has nothing to do with the Bill that is about to be moved by my good friend, Hon. Jude Njomo. The Temporary Deputy Speaker (Hon. Cheboi): What does it have to do with then? Hon. Wandayi: We have a serious issue that I need your guidance on as a House. I would like to urge you to allow one or two Members to contribute to this matter before you can give guidance. As we speak, our sovereignty as a country is under attack. It is on record that the Independent Electoral and Boundaries Commission (IEBC) has called off the voter registration exercise in Migingo Island, which is part of Nyatike Constituency in Migori County. It is also on record that Ugandan security officers have arrested Kenyans--- The Temporary Deputy Speaker (Hon. Cheboi): Hon. Wandayi, you are now a very seasoned politician. You have been in this House for the last three-and-a-half years. That is obviously not the direction to take. You have quite a number of ways in which you can move the House to discuss any matter that is of concern. I am sure that you, Hon. Wandayi, being an astute follower of our Standing Orders, know several ways you can move the House. Why can you not explore any means and you have the opportunity? It probably is a matter of national concern, but you can move it in the right manner. You have been heard but use the correct manner to bring it before the House and you will be heard. Thank you, Hon. Wandayi. Proceed, Hon. Njomo. Disclaimer: The electronic version of the Official Hansard Report is for information purposes only. A certified version of this Report can be obtained from the Hansard Editor. March 10, 2016 PARLIAMENTARY DEBATES 3 Hon. Njomo: Hon. Temporary Deputy Speaker, I beg to move that the Banking (Amendment) Bill 2015 be now read a Second Time. The Temporary Deputy Speaker (Hon. Cheboi): I am sure you can refer to it in your Order Paper and it will make it easier. Hon. Njomo: Thank you, Hon. Temporary Deputy Speaker. I beg to move that the Banking (Amendment) Bill (National Assembly No.62 of 2015) be now read a second time. The principal objective of this Bill is to provide a mechanism of regulating banks and other financial institutions on the interests they charge through the introduction of a cap. The Bill proposes to put a cap on the interest rate on the amount that the banks and financial institutions charge for loans and fix a minimum rate of interest that those institutions must pay for deposits received from customers. To this end, the Bill seeks to amend the Banking Act by introducing a new Section 13(A) that requires that banks or financial institutions disclose all charges they charge when they are transacting those businesses. Many people have borrowed loans from banks and get surprised when they are asked to pay amounts which are much higher than they had anticipated because of the many hidden costs that are not disclosed during the borrowing. That has resulted into too many bad loans and many people have lost their property through auctions. As at 2014, there was a whooping Kshs107 billion non-performing loans. I am further asking that the Banking Act to be amended and a new Section 33(b) be introduced. The section will set a maximum interest rate chargeable by credit facilities at below 4 per cent of the rates set by Central Bank of Kenya (CBK) and guarantees an interest rate of 70 per cent of the base rate on the amount that one deposits with any bank. If this Bill is passed, it will go a long way in safeguarding loans that are taken by hardworking Kenyans. It will make sure that we have more people getting loans and using them for business. It is my considered view that any credit facility that will charge more than the recommended amount will be unfair to Kenyans and it is not going to help them. Kenyans will be unable to do any business. We know very well that any business that makes a profit of 30 per cent is termed as a good business. Today, many financial and banking institutions are charging as much as 24 per cent. If you are making a profit of 30 per cent and 24 per cent goes to the banks, you are left with only 6 per cent. That is the amount that you will have to pay taxes, pay your people and do all the other costings. It means that our people are working for the banks. That is why in this Bill, we propose to put some penalties for those banks and other financial institutions that are not going to abide by law. This law will target the management of those financial institutions. Our country’s development is guided by Vision 2030 and its roadmap to development. That will never be attained with the current mindset of banks. Banks do not think about the people who are borrowing the money. They only think about the profits that they are going to record at the end of the year. I have done quite a bit of research on many companies that earn over Kshs1 billion per year. I was surprised to find that, out of the 10 best performing companies in this country, seven of them are banks. I want to go through that analysis. The best performing company in the last three years has been Safaricom, which has been recording a profit of Kshs34.9 billion. It is followed by Equity Bank with a profit of Kshs18.1 billion; followed at position three by Kenya Commercial Bank at Kshs17.7 billion. Then there is Standard Chartered Bank with Kshs14.3 billion, East African Breweries Limited (EABL) with Kshs14.1 billion, Barclays Bank with Kshs12.3 billion, Co- Disclaimer: The electronic version of the Official Hansard Report is for information purposes only. A certified version of this Report can be obtained from the Hansard Editor. March 10, 2016 PARLIAMENTARY DEBATES 4 operative Bank with 12.3 billion, Centum Investment with Kshs8.8 billion, I&M Bank with Kshs7.7 billion and Diamond Trust Bank with Kshs7.2 billion. Those are the 10 best performing companies in the country. Seven of them are banks. I am not against banks making profits, but what we are against as legislators are banks making so much profit, and other businesses that borrow money from banks to do business do not make any profit. In every sector of our economy, there are Savings and Credit Co-operatives (SACCOs) which help employees and people to borrow money and do business or to develop their own welfare. The SACCOs in this country have helped many Kenyans to elevate their standards of living. We know that SACCOs charge 1 per cent per month or a total of 12 per cent per year and yet, they have made profits and grown into big organisations. We know that many buildings in Nairobi are owned by SACCOs and many investments have been done by them. They have charged 12 per cent since I was a small baby up to now and they are making profits. Banks keep changing their interest rates. Today, there are banks that are charging almost 25 per cent and they claim that if this is affected, they will not make any profits. This is not the first attempt to control bank interest rates. We know that banks have really resisted this. In the year 2000, the former Member of Parliament for Gem Constituency, Hon.